What Can a Real Estate Agent Write Off?

As an independent real estate agent, understanding and utilizing tax write-offs can reduce your taxable income. Operating as a self-employed professional brings opportunities for deducting business expenses. These deductions can lead to savings, impacting net earnings. Careful attention to detail in expense tracking offers financial benefits.

Common Business Deductions

Real estate agents incur routine expenses deductible as ordinary and necessary business costs. Marketing and advertising expenses are a common category, encompassing costs for signage, online advertisements, website development, professional photography for listings, and open house expenses like refreshments and staging. These expenses promote services and attract clients.

Office supplies and equipment are common deductions for agents. These include computers, printers, paper, pens, and software subscriptions for customer relationship management (CRM) or design tools. Furniture for a dedicated office space, whether at home or in a rented location, can be expensed or depreciated.

Professional fees and dues are deductible, covering costs such as Multiple Listing Service (MLS) fees and memberships in real estate associations like the National Association of Realtors. Licensing fees, renewal fees, and errors and omissions (E&O) insurance premiums are also deductible business expenses. Broker desk fees, if applicable, are deductible.

Rules apply to gifts and business meals for client interactions. Client gifts are deductible up to $25 per recipient per year. Business meals, which must have a clear business purpose and not be lavish, are 50% deductible.

Fees paid for professional services from accountants, bookkeepers, or legal counsel are deductible. Communication expenses, such as the business portion of a phone line or internet service, are also deductible.

Vehicle and Travel Expenses

Real estate agents use vehicles for business purposes, making vehicle expenses a common deduction category. There are two methods for deducting these costs: the standard mileage rate or actual expenses. For 2025, the standard mileage rate for business use is 70 cents per mile.

Choosing the standard mileage rate requires tracking business miles driven. Alternatively, agents can deduct the actual costs of operating their vehicle for business. Both methods cannot be used for the same vehicle in the same year.

Beyond vehicle operation, other travel-related costs are deductible. Tolls and parking fees incurred for business activities, such as client meetings or property showings, are deductible. For overnight business travel away from an agent’s tax home, expenses such as airfare, lodging, and 50% of the cost of meals are deductible for conferences, training, or client meetings.

Home Office and Related Expenses

Many real estate agents operate from a home office, making this a common deduction. To qualify, the home office space must be used “regularly” and “exclusively” for business. Exclusive use means the area is solely for business activities.

The home office must be the agent’s principal place of business, a place to meet clients, or a space for administrative or management activities if no other fixed location exists. There are two methods for calculating the home office deduction. The simplified option allows a deduction of $5 per square foot of the business-use area, up to a maximum of 300 square feet ($1,500 maximum deduction).

The regular method involves calculating the actual expenses for the home office. This includes a proportionate share of expenses such as mortgage interest or rent, utilities, homeowner’s insurance, and repairs. The percentage of the home dedicated to business use determines the deductible portion of these expenses.

Education and Professional Development Costs

Investing in education and professional development is important for real estate agents and tax-deductible. Costs for continuing education courses, which are required to maintain a real estate license, are deductible. These courses must maintain or improve skills in the agent’s current work, not qualify them for a new profession.

Expenses for obtaining specialty certifications or designations relevant to the real estate profession are also deductible. This includes registration fees and materials for industry conferences and seminars. Subscriptions to professional real estate magazines, journals, or online resources that contribute to professional knowledge are also deductible.

Record Keeping and Documentation

Accurate record-keeping is important for substantiating all claimed business deductions. Agents should maintain records for every expense, including receipts, invoices, and bank or credit card statements. Digital record-keeping, using apps or accounting software, can simplify organization.

For vehicle expenses, a mileage log detailing the date, purpose, destination, and mileage for each business trip is important. For other expenses, information to track includes the date of the expense, the amount, the business purpose, and the payee. Accurate and organized documentation is important to support deductions in the event of an IRS audit.